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Debt Service

Equalization
Draft prepared for Dover-Eyota School District
by Becky Gerdes for the February Legislative
Session
Goal
• To equalize homeowner tax effort for school districts by
linking Debt Service Equalization to a fixed percentage of
state average Adjusted Net Tax Capacity (ANTC)
Unequal Distribution
• There are property poor districts which means…
• There is not a good mix of commercial, business and property tax
that is residential.
• When you get more residential than the business side, it can
create an unequal distribution.
• Unequal distribution results in charging more money to get the
same outcome for a student.
Concern
• State funding for E-12 public schools has not kept pace
with rising costs, additional mandates and annual
inflation.
• Districts rely on school levies just to maintain current
programming or reduce budget cuts.
• The cost to the local taxpayer for the school levies is
based on the individual property wealth of the school
district.
Funding inequities among school
districts
Triadic Relationship
Federal

State Local
State reliance on local property tax
to fund a portion of E-12 education
Variation in Tax Base Among School
Districts
Variation in Tax Base Among School
Districts
Purpose of Equalization: Legal
Context
Minnesota Constitution, Article 13, Section 1

● It is the duty of the legislature to establish a general


and uniform system of public schools...
● The legislature shall make such provisions by taxation
or otherwise as will secure a thorough and efficient
system of public schools throughout the state...
Purpose of Equalization: Legal
Context

• Minnesota Supreme Court, Skeen v. State of Minnesota,


August 20, 1993 i. Education is a fundamental right in
Minnesota.
• Our decision requires the state to provide enough funds to
ensure that each student receives an adequate education
and that funds are distributed in a uniform manner...
Given…
• the state’s reliance on local property taxes to fund E-12
education
• large disparities in property tax base among school
districts
• the constitutional requirement for the state to provide a
general and uniform, thorough and efficiency system of
public schools
Equalization
• Equalization is needed to reduce disparities in educational
opportunity by linking Debt Service Equalization
Resources on Debt Service
Equalization
•ANTC page = MN Department of Revenue = 
http://www.revenue.state.mn.us/propertytax/Pages/statisti
cs-antc.aspx

•Financing Education in Minnesota 2016-2017 = a


publication of the MN House of Representatives Fiscal
Analysis Department, August 2016 = 
https://www.house.leg.state.mn.us/fiscal/files/16fined.pdf
   (page 9 has a definition of ANTC). 
Resources on Debt Service
Equalization
•Minnesota School Finance: A Guide for Legislators =
December 2017 guidebook from the Research Department
at the MN House of Representatives = 
http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf

•MN Department of Education School Finance page = 


http://education.state.mn.us/MDE/dse/schfin/

 
Resources on Debt Service
Equalization
•Definition of “Debt Service Equalization program” from
the 2017 MN State Statutes = 
https://www.revisor.mn.gov/statutes/?id=123B.53
Sample maps below, but they are older
(2014). 
 
http://www.mreavoice.org/mrea-map-raises-question-on-calcu
lating-school-district-wealth/
http://www.mreavoice.org/mrea-releases-map-on-household-
income-by-minnesota-school-districts/
http://mreavoice.org/wp-content/uploads/2015/03/MREA-Se
asonal-Rec-Equalization-on-LOR.pdf
https://www.minnpost.com/education/2017/02/legislature-g
oing-be-debating-education-funding-again-how-exactly-doe
s-minnesota-p